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Emerging technologies alter the way agencies, industry do business

Constantly evolving advancements in technology may hold the key to helping
agencies do their jobs quicker, cheaper and more efficiently in times of tight
budgets and sequestration.

At the same time, agencies are turning to industry more than ever to access
emerging technologies like cloud, mobile and big data. New companies are popping
up, and established contractors, big and small, are altering the way they do
business to take advantage of emerging technologies and the way that technology is
delivered.

Federal News Radio's special report, A New Era in Technology, examines the sea change that will force
federal agencies and contractors to think differently as they learn how to master
these new technologies together.

Federal News Radio teamed with Govini to analyze the
government's IT spend over the last five years. According to Govini's analysis, spending on emerging technology grew from $717
million in 2009 to $839 million in 2013 — peaking at $968 million in 2012,
the year before sequestration kicked in.

"The whole face of the technology industry is undergoing change on a constant
basis," said Stan Soloway, president and CEO of the Professional Services
Council.
"What we really see is a slow but inexorable movement towards a consumption-based,
or what some people refer to as a service environment, rather than owning
infrastructure. It's a challenge in the private sector but even a bigger challenge
for the government."

In the broad technology front, the rise of consumption-based models, with cloud
being a perfect example, is changing the face of the industry .

For the purposes of this report, "emerging technologies" were defined as any contract
under PSC Code 70 or PSC Code D that included keywords relevant to cyber, big
data, cloud, mobility, health IT or energy IT. This chart shows the number of
contracts (actions) and the amount of money spent on those contracts (spend) from
2009 to 2013.

"In the future, you won't have the
numbers of people onsite with the customer because everything will be remote and
virtualized and so forth," Soloway said. "And so, just the very way you go to
market is changing
and that changes pricing strategies, it changes bidding strategies and for both
government and industry, there's still a lot to learn about how best to make that
work best for the government. So, there are some very fundamental changes taking
place on the industry side."

Jeff Rubenstein is the founder and president of SmartProcure, a Florida-based
information service provider that aggregates purchasing data from across the U.S.
on the local, state and federal level. It shares that data with government
agencies and contractors so that they can better understand each others' needs.

Rubenstein's company has done extensive research on how the changes in IT have
affected the federal government and contractors. SmartProcure has seen several
trends occurring, one of which is a sense of comfortability developing at agencies
when
it comes to outsourcing.

"In terms of IT especially, you're finding a bigger trend toward comfortability in
sending out either their data and/or projects to be done externally versus
internally," he said. "HealthCare.gov may be contrary to that, but there has been a
lot of comfortablity with going to a GoogleApps-type platform sales force. You're
seeing a lot of those type of companies be more successful in the government
market."

One of the struggles from a small business standpoint, though, is establishing
credibility.

"We're seeing a lot of new companies show up to solve needs, either with the
government agency — what they're doing internally — or to solve a need
that isn't being solved by them or one of these large, outsource providers,"
Rubenstein said.

He pointed to ArchiveSocial
as an example of a small IT company that is working with agencies to archive their
social media.

"These government agencies have gotten comfortable sending out tweets and posting
things on Facebook, but, in order to maintain proper record keeping, they didn't
have a mechanism to do that," Rubenstein said.

ArchiveSocial helps agencies keep
proper records in order to comply with Freedom of Information Act requirements.

"So, in conjunction with what they're comfortable doing with a large company like
a Twitter or Facebook, these smaller
companies are adding services that either
fill a legal need or potentially a social need or another need the government
agency might have," Rubenstein said.

Agencies turn to the commercial marketplace for help

With constrained budgets, agencies are having a harder time finding talent
in-house, so looking to the contractor community to provide support in the IT
realm
is natural.

"There's clearly a movement towards the cloud," Rubenstein said. "Also, technology
is getting faster and getting more advanced, where it's hard to keep the best
skill sets within a government agency. Outsourcing it, in many cases, is the only
type of option they have in order to deploy a certain service or to manage a
certain service."

Rubenstein's company is seeing the greatest demand from an IT perspective in the
data and cybersecurity areas.

"There's a huge movement to open data, a lot of data that's being generated from
tools that are out there now, data gathering mechanisms they have in place and
they want to track and analyze, " he said. "I think they're seeing success, both
private businesses and the federal government are seeing success analyzing some of
this big data that they have. Along with that obviously comes the cybersecurity
aspect, whatever data that shouldn't be in the public eye is secure and managing
all that technology that they'll deploy in house."

Mark Weber, president for the U.S. public sector at NetApp, a storage and data
management company that is one of the top storage providers for the federal
government, said that the technology in the digital storage world has undergone a
drastic change.

"There are all kinds of things that we focus on which allow you to store your data
way more efficiently," he said, of the services his company provides the
government. "So, you don't just look at, 'I'm going to buy another 10 terabytes.'
Agencies are also looking at, 'How efficiently I store that data,' because some of
the technology that we have and other companies as well, can clone that data and
provision it different ways, can backup and compress it differently. So, the
technology is playing a big role on who can store more data on the disk drives and
who can find it and retrieve it and have it more secure."

A shift in how new technologies are delivered

At the same time, the way those technologies are delivered to agencies is
changing. It used to be an agency's CIO and staff would figure out what problem
needed to be solved, go out into the marketplace, identify what products offered
the best solutions, purchase those products, stand them up, integrate them and
deploy them. With fewer capital dollars coupled with advancements in on-demand
applications over the last few years, agencies have started changing the way
they're integrating technology.

"Now, the CIO is not just looking for product, they're also now more of a broker,"
Weber said. "They're out there saying, "Hmm, maybe I'll get my storage from this
guy, who offers it on demand. Or, I'll get my email from this company, who will
provide it by the mailbox rather than buy an email application, buy a server or
storage, buy the whole stack and build it yourself.' Acquisition strategies have
changed drastically, not just the technology."

One of the biggest changes in technology is in converged infrastructures.

"Before you would go out and procure your network from a networking company, a
CISCO, a
Juniper, something like that, you'd go get your servers from somebody
else. ... Now, what we're doing is we're teaming with those companies and
pre-integrating those products, so we've gone to CISCO and VMWare and the server
companies and integrated our product, tested and validated it prior to you buying
it," Weber said. "Before, you'd buy it from five different companies and you would
show up and
take it out of the box, integrate it and try to stand it up. We're doing that
before it gets there. So, you can buy the best of breed products from those
separate companies and it's already validated and tested."

The rise of converged infrastructures may appear to some to signal the decline of
the role of the systems integrator, but that may not be the case.

"The old version of the old systems integrators, are they morphing their business
models incredibly fast?" Weber asked. "You bet. If they don't, they're going to
lose most of their business. You see a lot of them moving pretty quick and some of
them not moving so quick, so that just means that they won't win more business."

On the other hand, when you're doing more agile, incremental development, there
may be less of a need for a systems integrator role in the classic sense.

"But you also always have to have a systems engineering and systems integration
capacity, because at the end of the day that's what you're doing is integrating
systems," Soloway said. "And whether you do it internally or externally, what kind
of skills and what it looks like, how it manifests itself may be different, but
that basic skill is not going to go away, because you're not going to have a
system that lives in such isolation it doesn't require any integration."

New companies emerge, established companies change their approach

But who are the companies coming forward to provide these new services based off
of emerging technologies?

Because the federal IT market is so huge, Weber said, you'll always see new
companies spring up to address specific needs spawned by new technology and you'll
see older, more established companies alter the way they do business to address a
client requirement.

"You're always going to see both," Weber said. "It doesn't matter if they're
spending less money next year, it's still a huge IT market."

Soloway agreed. "You clearly have new players in the market," he said. "Who
would've thought Amazon would be a player in this market five years ago? It would
not have occurred to any of us. So yes, we clearly have new players. It remains
true for companies that are not very large with fairly good resources, like an
Amazon, that getting into this market for a small commercial company is a very
cost-prohibitive endeavor. The barriers to entry are significant still. So,
there's still that challenge."

"There should be a greater place for commercial item contracting, because even
the traditional government contractors can utilize a commercial item process to
streamline their operations and provide better value as well," he said.

Waldron's concern with this approach is that the "commercial" element needs to be
put back into commercial item contracting.

"The government needs to emphasize reducing barriers to access to the federal
marketplace to adopting more commercial practices, reducing government-unique
requirements that are inconsistent with the commercial marketplace. That way, you
can leverege what's already going on out there," he said.

Waldron remembers working on major federal procurement projects in the 1990s that
took years to award. The day after the award was made, the government would be
substituting technology that was proposed with the latest technology because over
the long procurement process, the technology had changed.

"The irony there is that the award was based on technology that the government's
never going to actually use," he said. "They're going to use later technology.
There's still some of that today, frankly, and that's when I go back to the
commercial item and item acquisitions and articulating requirements. It's a
powerful combination if you're able to clearly articulate what you need or do a
performance-based approach and do it under a streamlined manner using
commercial-item processes to get what you need in real time."